144 Minn. 166 | Minn. | 1919
In February,-1916, iby written contract, plaintiff leased to defendant certain premises situated in the city of St. Paul for the term of 99 years at the annual rental of $3,000 payable quarterly. Defendant entered into possession of the premises and thereafter made all quarterly payments of rent as they became due until March, 1918, when he defaulted. This action was brought to recover the instalment of rent then due. Defendant again defaulted in the payment of the instalment which fell due on June 1, 1918, and plaintiff brought a second action to recover the same. At the trial the actions were consolidated and tried as one.
Defendant alleged in defense and as a counterclaim that he was induced to enter into the contract by certain alleged false and fraudulent representations made by plaintiff -at the time of the transaction, the falsity of which, according to the allegations of the answer, will cause a loss and damage to him in the sum of $1,100 -annually' during the period of the lease; a grand total of $108,900, for which he demands judgment against plaintiff. Defendant did not rescind the contract for the alleged fraud, upon a discovery thereof, but retained, and, so far as the pleadings disclose, still retain® the possession of the leased premises.
At the opening of the trial the court granted plaintiff’s motion for judgment on the pleadings, on the ground that the answer stated neither a defense nor valid counterclaim. Judgment was so entered and defendant appealed.
Defendant leased the premises, an apartment house, for the purpose
The answer also alleges that defendant relied upon and was induced to enter into the contract by the representations stated, and that by reason of other engagements he did not discover the fraud -so perpetrated until “several months prior to the commencement of the action;” that he offered to rescind the contract hut that plaintiff declined the offer, hut there is no allegation that defendant rescinded in fact by returning the premises to plaintiff or otherwise; 'on the contrary, his answer proceeds on the theory that he may retain the possession of the premises under the lease and recover the damages claimed.
The rights of a person who has been induced to enter into a contract by fraud or fraudulent representations are well settled and require no extended statement or discussion. As to executed contracts, those that
In the case at bar the contract, at the time the fraud was discovered, had been partly performed. Defendant had taken possession of the leased premises and paid the stipulated rent for a year and a half before he discovered that he had been defrauded. But the part of the contract then in fact performed was a mere trifle of the whole, for the lease then had nearly a hundred years to run. In a situation of that Mnd, we think the rule last stated, namely, that as to rights arising under a contract, yet wholly executory when the fraud is discovered, should apply by analogy to the partly performed executory contract. In & case of that Idnd the defrauded party should be required, as to the future operation of the contract, which may be treated as severable from that which has been performed, promptly to rescind, retaining the right to be restored to his former position by way of damages or other appropriate relief. He should not be permitted to treat the contract as subsisting and go forward with the performance thereof, notwithstanding the fraud, and be entitled to damages to accrue from such future performance, thus to speculate upon the fraud and be the instrument of his own loss. Thompson v. Libby, supra.
There is high authority for the proposition that, even in the case of the partly performed executory contract, the remedy of prompt. rescission and disaffirmance is exclusive, and, where there is no such rescission, no damages for the fraud can be had, the fraud being waived. Si
Humphrey v. Sievers, 137 Minn. 373, 163 N W. 737, is different from this case in its facts and did not involve damages to accrue from future performance of the fraudulent contract.
We do not stop to consider the various elements of damages set forth and alleged in defendant’s answer. It is sufficient to say that for any actionable fraud therein alleged defendant may recover to the extent stated. Nor is it necessary or proper to discuss the question as to when defendant discovered the fraud; the pleadings make it an issue of fact.
Judgment reversed.